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The Iraqi government has renewed the agreement to deliver up to 2 million tonnes of crude oil to Lebanon over the course of a year, reported Reuters, citing the energy ministry of Lebanon.

The two countries have signed a memorandum of understanding, which will see Iraq supply fuel oil and crude oil to Lebanon.

In May this year, Lebanon signed an agreement with Iraq to import more fuel as Beirut strives to increase electricity production to aid in its recovery from a protracted economic crisis.

Baghdad also agreed to boost the amount of heavy fuel oil provided this year under a current agreement by 50%, to 1.5 million metric tonnes.

As per the heavy fuel oil agreement, which was initially reached in July 2021, Iraq provides the Lebanese government with fuel in exchange for services, including the provision of healthcare for the Iraqi people.

Lebanon then swaps the heavy fuel oil for petrol, which it can use in its power plants.

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By GlobalData

These power plants have been operating at a reduced capacity for decades, but they are nearly shut down as a result of a financial crisis that has affected the state’s ability to purchase fuel, the report said.

Earlier it was reported that a group led by French energy giant TotalEnergies is expected to start drilling for oil and gas off the coast of Lebanon in September.

Italy’s Eni and QatarEnergy are also members of the consortium drilling in Block 9 offshore Lebanon.